The iconic camera company Kodak will soon seek bankruptcy protection, according to media reports. Kodak will also try to sell its 1,100 patents through a court-supervised auction.
The 131-year-old company, known for ushering in a new era of American photography, is facing an ugly reversal of fortunes. According to the Wall Street Journal, Eastman Kodak Co. is preparing to seek bankruptcy protection in the coming weeks, a source familiar with the matter said.
Kodak is also "talking to banks about some $1 billion in financing to keep it afloat during bankruptcy proceedings," the WSJ article adds.
As it tries to remain stable under Chapter 11, Kodak will seek to sell its 1,100 patents, but observers are skeptical. PCWorld's Ed Oswald writes, "The sale of these patents do not address the changes in the marketplace that Kodak likely will not be able to adjust to in short order. It is a short term fix to a long term problem."
Kodak's financial challenges reflect an age-old company attempting to adapt to the digital era. Even though Kodak invented the digital camera in 1975, the company failed to capitalize on its invention and instead focused on selling film, used in not just Kodak cameras but in many competitors' technology. It then turned to the printer market, and did quite well for awhile, but as the Atlantic writes, "as of last quarter, Kodak's innovative printers still weren't turning a profit. And while the company is litigating a case against Research In Motion and Apple over the technology in smartphone cameras, its income from lawsuits has dried up."
The WSJ adds more details on where Kodak is headed. Kodak is meeting with large banks including J.P. Morgan Chase & Co., Citigroup Inc. and Wells Fargo & Co. "for so-called debtor-in-possession financing to keep the company operating in bankruptcy court, people familiar with the matter said."
Departures have hurt the company. Chief Communications Officer Gerard Meuchner has resigned from Kodak, Wall Street Journal writes, and in the past two weeks, three directors left Kodak's board.
Kodak's fall should serve as a warning to other tech companies, says the former chairman of a local arm of Kodak. "To make the call to go into new businesses when your legacy business is in terminal decline is a breathtakingly difficult one to make – but when your business is in that position, then you must adapt in order to survive," notes Ziggy Switkowski, according to the Business Spectator.
In December, a survey found respondents believed Kodak would be one of the first brands to disappear by 2015, citing “bad product development, [is] not forward-looking [and] not adapting to change.”